Devry ACCT504 final exam 2016

Question 1.1.(TCO A) A disadvantage of the corporate form of business is _____.(Points : 5)

Question 2.2.(TCO A) The Statement of Cash Flows is composed of the following classes of cash flow. (Points : 5)

Question 3.3.(TCOs A and B) Below is a partial list of account balances for LBJ Company.

What did LBJ Company show as total credits?(Points : 5)

Question 4.4.(TCOs B and E) Which of the following statements is correct with regard to cash-basis accounting?(Points : 5)

Question 5.5.(TCO D) Which inventory method will result in the lowest income taxes when prices are decreasing?(Points : 5)

Question 6.6.(TCOs A and E) Equipment was purchased for $85,000. Freight charges amounted to $2,550 and there was a cost of $10,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $5,000 salvage value at the end of its 6-year useful life. Depreciation expense each year using the straight-line method will be _____.(Points : 5)

Question 7.7.(TCOs D and G) When the market rate of interest is equal to the stated rate of interest on the bond, the bond will require _____.(Points : 5)

Question 8.8.(TCO C) Accounts receivable arising from sales to customers amounted to $50,000 and $45,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $150,000. Based on these transactions, the cash flows from operating activities to be reported on the statement of cash flows would be _____.(Points : 5)

Question 9.9.(TCO F) A company has Preferred stock, 8%, $10 par, 30,000 shares authorized and issued. The balance in the Preferred Stock account is $300,000. This means that:(Points : 5)

Question 10.10.(TCO F) When performing a common-size income statement, the 100% figure is _____.(Points : 5)

Question 11.11.(TCO F) In vertical analysis, the base amount for cost of goods sold expense is generally _____.(Points : 5)

Question 12.12.(TCO F) A common ratio to measure profitability is the _____.(Points : 5)

Question 13.13.(TCO F) Shareholders are usually most interested in evaluating _____.(Points : 5)

Question 14.14.(TCO G) To calculate the market value of a bond, we need to use the time-value-of-money concept called _____.(Points : 5)

Question 1.1.(TCO A) Below you will find selected information (in millions) from Coca-Cola Co.’s 2012 Annual Report.

Other information taken from the Annual Report.

Required: 1: Using the information provided prepare a Balance Sheet. Separate the current assets from non-current assets and provide a total for each. Also, separate the current liabilities from the non-current liabilities and provide a total for each.
2: Using the Balance Sheet from your answer above, calculate the Current Ratio and Return on common stockholders’ equity.(Points : 36)

Question 2.2.(TCO B) The following selected data was retrieved from the Walmart, Inc. financial statements for the year ending January 31, 2013.

Required: 1: Using the information provided above, prepare a multiple-step income statement.
2: Calculate the Profit Margin, and Gross profit rate for the company. Be sure to provide the formula you are using, show your calculations, and discuss your findings and results.
(Points : 36)

Question 3.3.45. (TCO C) Please review the following real-world Hewlett Packard Statement of Cash flows and address the two questions below.

Required: 1: Please calculate the percentage increase or decrease in cash for the total line of the operating, investing, and financing sections bolded above and explain the major reasons for the increase or decrease for each of these sections. 2: Please calculate the free cash flow for 2012 and explain the meaning of this ratio.(Points : 36)

Question 4.4.(TCO D) You are CFO of Goforit, Inc., a wholesale distribution company specializing in emerging technologies. Your CEO is a brilliant marketer, but relies on you to explain issues and choices in accounting and finance. She has heard from other members of a CEO organization to which she belongs that a company’s net income can vary widely depending on which accounting choices are made from the “GAAP menu.”

Assuming the goal is tomaximizenet income, choose an accounting treatment from each of the following scenarios, and explain to your CEO why the choice will produce the desired effect on reported net income for the current year. Include in your answer the effect of the choice on both the income statement and balance sheet.

Required: 1: Goforit carries significant electronics inventory in a competitive environment in which prices are actually falling. Which inventory valuation method would you choose—LIFO, FIFO, or average cost? Assume that unit purchases exceed unit sales.
2: Goforit has a large investment in warehouse equipment, including conveyor belts, forklifts, and automated packaging systems. Which depreciation method would you choose: straight line (SL) or double declining balance (DDB)?(Points : 36)

Question 5.5.(TCO F) Please review the following real-world ratios for Johnson & Johnson and Pfizer for the year ended 2012 and address the 2 questions below.

Required: 1: Please explain the meaning of each of the Pfizer ratios above. 2: Please state which company performed better for each ratio.(Points : 36)